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August 5,2017

Fuelled by higher earnings from key taxes such as VAT and new sources such as the oil and gas industry, government’s revenue collection for the first half of this year rose by 13.1 percent to $97.2 billion.

This was disclosed in the Ministry of Finance’s Mid-Year Report, which was tabled in the National Assembly yesterday.

With the government having lowered the Value Added Tax (VAT) rate from 16 percent to 14 percent in this year’s budget but broadening its coverage, the take for the first half of this year had been eagerly awaited. The increase in VAT earnings would add credence to criticisms that the government had gained despite the lowering of the rate by 2 percent.

For the first half of 2016,  $75.1 billion was collected.

The report notes that of the revenue collected over this period, 88.3 percent represents tax revenue, with internal revenue collections reaching $41.6 billion, an increase over the $36.5 billion earned in the same period of 2016.

“This increase was primarily attributed to a growth in corporation tax payments of $2.3 billion by several companies in the manufacturing and services sectors as well as the natural resource sector,” the report explained.

Additional growth in the amount of withholding taxes by $865.5 million, or 27.2 percent was mainly due to payments by two companies providing support services to the oil and gas sector, and interest earned on savings accounts at commercial banks. In this area, $191.9 million of the amount collected was arrears.

Personal income tax collections during the first half of 2017 were $265.3 million above the $10.6 billion collected in the same period of 2016. The report notes that a 6 percent increase in employers’ compliance saw 1,777 employers making payments during the period January to June, 2017, and nearly $1 billion in arrears collected.

Growth was also recorded in the collection of customs and trade taxes with $5.6 billion more being collected compared to the same period in 2016, while the value added and excise taxes increased by $2.04 billion and $1.96 billion, respectively.

The total collection of VAT over this period was $19.29 billion while $16.84 billion in excise taxes were collected. Specific mention is made of a $1.2 billion increase in VAT from imports of goods; a growth partly attributed to policy changes in budget 2017. This would have been on the importation of heavy-duty machinery. VAT on domestic goods also increased by $838.5 million, due to higher payments from the telecommunication, and wholesale and retail trade sectors.

Other areas which saw increased revenue collection were petroleum products whose earnings increased by $3.2 billion to $10.9 billion. According to the ministry, these earnings offset the reduction in excise tax on motor vehicles, which declined by $1.5 billion during the period under review.

Excise tax collected on motor vehicles equaled $2.9 billion, compared to $4.4 billion, during January to June 2016.

Conversely, revenue collection from excise taxes on domestic alcoholic beverages increased by $238 million to $2.1 billion due to the budget 2017 measure that amended excise taxes for alcohol consumption and higher sales of beverages on the local market.

Finally, the combination of a $1,000 increase in the airport departure tax as well as a 6.3 percent increase in the number of departing passengers saw travel taxes jump by 23 percent.

Increases were also recorded in the total non-tax revenue, which rose by $567.4 million to $11.3 billion during the first half of 2017, compared to the same period in 2016.

The report credits this increased collection to higher transfers from statutory agencies during the review period.

“Fees, fines and charges also reported a 4.2 percent increase to $684.0 million at end June 2017; however, rent and royalties declined by 32.3 percent reflecting lower gold declaration from both Troy Resources and Guyana Goldfields,” the report disclosed.

Meanwhile, remissions of tax for the first half of 2017 were $24.5 billion or 28.6 percent of tax revenue, more than the $20.7 billion or 27.5 percent of tax revenue remitted in first half of 2016.  This figure will raise concerns as key officials over the years have stressed the need to cut remissions.

“The increase was in the categories of companies/businesses, $3.0 billion; Ministries and Government Departments, $1.4 billion; and foreign funded projects, $488.8 million. Decreases in remissions granted were in the categories of diplomats, $284.5 million; remigrants, $348.8 million; churches/charitable organisations, $275.5 million; hospitals, $66.6 million; and public officials/officers, $47.8 million,” the report stated.

 A tax and spend government. But at this point I am wishing them success as my investments will suffer if they further drive the economy into the ground. I have no time to wait until 2020. 

FM

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